ECB: QE was opposed by a number of members, arguing it should be instrument of last resort

Author: Justin Low | Category: Central Banks

ECB releases the account of its September 2019 monetary policy meeting

  • Some members argued QE was not an efficient instrument given low yields
  • Some members argued that open-ended QE could push ECB into bigger purchases
  • That will create problems and challenge purchase limits
  • There were a number of reservations about rate tiering
  • Some policymakers were ready to support 20 bps rate cut if package excluded QE
  • Some policymakers questioned growth forecasts, calling them too optimistic
  • All policymakers agreed on the need for further easing
  • QE had "clear majority", rate tiering had "majority", 10 bps rate cut had "very large majority"
Yikes, if anything else this continues to show a significant division among the ranks in the ECB as they cannot really agree on the earlier announced stimulus package - especially on QE.

There were even some members who felt that they were unable to support a rate cut and those that just 'went along with' rate tiering because they hadn't much of a choice.

This will certainly pose challenges for further policy decisions and is something that Lagarde will have to address during her tenure if the divide gets too large. For now, the stimulus package has already been set into motion so there's not much to argue/debate.

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